Chapter 1 - Background


Chapter 1 - Background

1.1                 On 16 March 2005 the Senate resolved, in accordance with the recommendation of the Selection of Bills Committee,[1] that the provisions of the Telecommunications Legislation Amendment (Regular Reviews and Other Measures) Bill 2005 be referred to the Environment, Communications, Information Technology and the Arts Legislation Committee for inquiry and report by 11 May 2005.

Conduct of the inquiry

1.2                 The Committee wrote to a range of relevant organisations and individuals inviting submissions on the Bill, as well as advertising the inquiry in The Australian on Wednesday, 30 March 2005. Submissions were received from 11 organisations and individuals, as listed at Appendix 1. The Committee held a public hearing in Canberra on 11 April 2005, details of which are shown in Appendix 2.

1.3                 The Committee thanks all those who contributed to its inquiry by preparing submissions and appearing at the hearing.

1.4                 It should be noted that references in this report are to individual submissions as received by the Committee rather than a bound volume of submissions. References to Committee Hansard are to the proof Hansard: page numbers may vary between the proof and the official Hansard transcript.

The provisions of the Bill

1.5                 The Explanatory Memorandum states that the Bill 'responds to recommendations of Connecting Regional Australia,[2] the 2002 report of the Regional Telecommunications Inquiry ('the Estens Report') relating to:

  • the need for Telstra to maintain a local presence in regional, rural and remote parts of Australia; and
  • regular independent reviews into the adequacy of telecommunications in regional, rural and remote parts of Australia'.[3]

1.6                 According to the Second Reading Speech:

This legislation is part of a package that delivers on the government's commitments to implement its response to recommendations of the regional telecommunications inquiry as a matter of priority. The measures contained in this bill are directed at 'future proofing' regional telecommunications so that:

  • service quality is maintained into the future;
  • when future services start being provided, rural Australia will not miss out or face unreasonable delays; and
  • other benefits that Telstra currently provides as a result of its regional presence do not diminish.[4]

1.7                 Section 63 of the Telecommunications Act 1997 empowers the Minister for Communications, Information Technology and the Arts to impose conditions on carrier licences. The conditions in Telstra’s carrier licence are covered by the Carrier Licence Conditions (Telstra Corporation Limited) Determination 1997. They do not expressly include a requirement to maintain a local presence in regional Australia.

1.8                 This Bill does not impose any obligations on Telstra to maintain a local presence in regional Australia, nor does it require the Minister to include any such condition in Telstra’s carrier licence. Rather, Item 1 of Schedule 1 amends the Telecommunications Act 1997 to clarify that any licence condition that requires Telstra to maintain a local presence in regional, rural or remote parts of Australia may empower the Minister or the Australian Communications Authority (ACA) to make decisions of an administrative character. As the Explanatory Memorandum notes:

Such a licence condition could, for example, require the Minister or the ACA to approve a draft local presence plan setting out how Telstra will fulfil its obligations to maintain a local presence in regional, rural and remote parts of Australia. It is envisaged that the licence condition will provide a high degree of certainty and reassurance for:

  • regional, rural and remote communities - that an effective Telstra local presence will be maintained; and
  • Telstra - that it will maintain the right to manage its regional operations autonomously and in its commercial interests.[5]

1.9                 The second key part of the Bill is contained in Items 2 to 6 of Schedule 1. Those items insert a new Part 9B in the Telecommunications (Consumer Protection and Service Standards) Act 1999 relating to regular reviews of regional telecommunications, and insert relevant definitions in that Act. The reviews will be undertaken at least every five years by an independent expert committee appointed by the Minister. The committee, to be known as the Regional Telecommunications Independent Review Committee (RTIRC), is to consist of a chair and at least two other members (proposed subsection 158T(1)), all of whom will be required to have knowledge of or experience in matters affecting regional, rural and remote parts of Australia or telecommunications (proposed subsection 158T(2)). The committee will be required to report to the Minister on its findings and recommendations, and the Minister must table the report in the Parliament (proposed subsection 158Q).

1.10             Item 7 of Schedule 1 makes a consequential amendment to subsection 8BUA(1) of the Telstra Corporation Act 1991 to ensure that at least two directors of Telstra will be required to have knowledge of, or experience in, the communication needs not only of regional areas but also of rural or remote areas of Australia.

1.11             Part 2 of Schedule 1 (Items 8 to 11) makes a series of amendments consequential on the establishment of the Australian Communications and Media Authority (ACMA).

The Estens Report recommendations

1.12             The Estens Report contained 39 recommendations on the adequacy of telecommunications services to regional, rural and remote Australia. The Government announced in June 2003 that it accepted all of the report's recommendations and that it would invest $181 million in a 'comprehensive response'. This Bill represents the Government response to recommendations in chapter 8 ('Telstra's local presence') and chapter 9 ('Sharing future benefits') of the Estens Report. Relevant recommendations are as follows:

RECOMMENDATION 8.1 Telstra should be required to maintain an ongoing local presence in regional, rural and remote Australia. The requirement should only apply to Telstra consistent with its status as the primary universal service provider. The requirement should not be unduly prescriptive or burdensome, and should be broadly compatible with Telstra’s commercial interests.

RECOMMENDATION 8.2 Telstra should be required to develop and publish a local presence plan to set out the range of activities and strategies it would deploy in regional Australia to address the Government’s broad objectives. Telstra would be required to regularly report on its achievements against the plan and to demonstrate to the Government, and to regional communities, that it was providing an effective and beneficial local presence.[6]

1.13             The Government response to those recommendations stated:

The Government will impose a licence condition on Telstra to maintain a local presence in regional, rural and remote Australia, including through developing a local presence plan, and reporting publicly on its achievements against the plan.[7]

1.14             The Explanatory Memorandum for the Bill envisages that the Minister will include a licence condition requiring Telstra to have a local presence plan. Such a requirement is:

... aimed at ensuring the continuation and further development of Telstra endeavours in regional, rural and remote Australia through promoting:

  • decentralised management and decision-making within Telstra;

  • representation for regional and rural interests within Telstra’s executive management structure;

  • effective direct customer servicing and support for regional Australia;

  • effective concentration and application of resources in regional, rural and remote Australia, including additional specialist staff who can address specific needs of rural customers;

  • effective coordination of effort in all service areas, and focus of responsibility for managing projects and service tasks;

  • effective information to regional, rural and remote customers; and

  • support through Telstra activities for broader regional community development.[8]

1.15             Recommendations in chapter 9 of the Estens Report called for an independent review mechanism for telecommunications in regional and rural areas:

RECOMMENDATION 9.1 The Government should put in place a process to regularly review telecommunications services in regional, rural and remote Australia, and to assess whether important new service advancements are being delivered equitably in those areas.

The review process should be linked to a strategic plan for regional telecommunications, and underpinned by ongoing arrangements that provide a high degree of certainty that Government funds will be made available to support service improvements in regional, rural and remote Australia, where they will not be delivered commercially within a reasonable timeframe.

RECOMMENDATION 9.2 Establishing a structure for future reviews of regional, rural and remote telecommunications services should:

  • provide certainty for regional, rural and remote communities;

  • ensure that reviews are independent from executive government;

  • allow for flexible and appropriate policy responses to meet the range of needs in regional, rural and remote Australia; and

  • promote competition and commercial service delivery as the most effective and sustainable service outcome.

RECOMMENDATION 9.3 The scope of regular reviews of regional, rural and remote telecommunications services should be flexible, but there should be a core focus on assessing whether important new telecommunications services are available equitably across Australia.

RECOMMENDATION 9.4 Future governments should be legally obliged to respond publicly to the recommendations of future reviews, and to justify responses that are not in accord with review recommendations.[9]

1.16             The Government response to those recommendations stated:

The Government will develop a strategic plan for regional telecommunications in consultation with key stakeholders.

The Government will legislate to require regular reviews on the adequacy of services in regional, rural and remote Australia to be undertaken by an independent expert panel appointed by the Minister for Communications, Information Technology and the Arts. Reviews will be structured and carried out in line with RTI Recommendations 9.2, 9.3 and 9.4, and must be undertaken no later than five years apart.[10]

1.17             Recommendation 9.5 of the Estens Report concerned future service improvements:

The Government should provide funding for future service improvements in regional, rural and remote Australia, rather than imposing financial obligations on industry.[11]

1.18             The Government accepted that recommendation 'in principle', stating:

The Government accepts the principle that support for non-commercial service improvements in regional Australia should be provided transparently by Government, and should aim to promote competition and minimise market distortions.[12]

1.19             Recommendation 9.6 stated:

The Government should ensure that regular reviews of regional telecommunications services are supported by organisational arrangements that provide a strong focus on monitoring and assessing regional, rural and remote service levels. The Australian Communications Authority would be an appropriate body to undertake this function.[13]

1.20             The Government response to this recommendation stated:

Both the DCITA and the ACA will continue to focus strongly on regional telecommunications issues, including through ongoing improvements to monitoring and assessing regional, rural and remote service levels.[14]

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